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Leases | 3 Months Ended
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Mar. 31, 2023
Leases |
Leases | 3. Leases The Company leases office space in South Plainfield, New Jersey for its principal office under two noncancelable operating leases through August 2024, in addition to office and laboratory space in Bridgewater, New Jersey and other locations throughout the United States and office space in various countries for international employees primarily through workspace providers. The Company also leases approximately 220,500 square feet of office, manufacturing and laboratory space at a facility located in Hopewell Township, New Jersey pursuant to a Lease Agreement (the “Hopewell Lease”) with Hopewell Campus Owner LLC. The rental term of the Hopewell Lease commenced on July 1, 2020 and has an initial term of fifteen years (the “Hopewell Initial Term”), with two consecutive ten year renewal periods, each at the Company’s option. The aggregate rent for the Hopewell Initial Term will be approximately $111.5 million. The rental rate for the renewal periods will be 95% of the Prevailing Market Rate (as defined in the Hopewell Lease) and determined at the time of the exercise of the renewal. The Company is also responsible for maintaining certain insurance and the payment of proportional taxes, utilities and common area operating expenses. The Hopewell Lease contains customary events of default, representations, warranties and covenants. In May 2022, the Company entered into a Lease Agreement (the “Warren Lease”) with Warren CC Acquisitions, LLC (the “Warren Landlord”) relating to the lease of two entire buildings comprised of approximately 360,000 square feet of shell condition, modifiable space (the “Warren Premises”) at a facility located in Warren, New Jersey. The rental term of the Warren Lease commenced on June 1, 2022, with an initial term of seventeen years (the “Warren Initial Term”), followed by three consecutive five-year renewal periods at the Company’s option. The aggregate base rent for the Warren Initial Term will be approximately $163.0 million; provided, however, that if the Company is not subject to an Event of Default (as defined in the Warren Lease), the Company will be entitled to a base rent abatement over the first three years of the Warren Initial Term of approximately $18.6 million, reducing the Company’s total base rent obligation to $144.4 million. The rental rate for the renewal periods will be at the Fair Market Rental Value (as defined in the Warren Lease) and determined at the time of the exercise of the renewal. Beginning in the second lease year, the Company is also responsible for the payment of all taxes and operating expenses for the Warren Premises. As a result, the Company recorded an operating lease ROU asset of $28.9 million and an operating lease ROU liability of $28.9 million as of the commencement date. The Company plans on developing the Warren Premises into office and laboratory space. The Company is entitled to an allowance of approximately $36.2 million to be provided by the Warren Landlord to be used towards such improvements. The Landlord is providing the allowance to cover those assets that are real property improvements, such as structural components, roofs, flooring, etc., whose useful lives are typically longer in nature. The Company evaluated the leasehold improvements under ASC 842 and determined that the Company will be the owner of the improvements, and therefore the $36.2 million allowance and $5.0 million due from the Landlord were treated as lease incentives at the commencement of the lease and included in the calculation of the lease ROU asset and lease ROU liability, effectively reducing both at Commencement Date. In connection with the execution of the Warren Lease, the Company also committed to fund a construction account with $3.6 million to go towards the Company’s improvements of the Warren Premises. Subject to the terms of the Warren Lease, the Company has a right of first offer to purchase the Warren Premises if the Warren Landlord receives a bona fide third party offer to purchase the Warren Premises or the Warren Landlord decides to sell the Warren Premises On June 19, 2020, the Company entered into a commercial manufacturing service agreement for a term of 12.5 years with MassBiologics of the University of Massachusetts Medical School ("MassBio"). The Company determined that the agreement was a finance lease, for which the Company recorded a finance lease ROU asset for $41.4 million and corresponding finance lease liability for $41.4 million at the onset of the lease agreement. Given that the leased asset is designed for the production of PTC’s AADC program and would not have an alternate use outside the PTC gene therapy platform without incurring significant costs, the Company determined that the lease should be treated as research and development expense under ASC 730. Accordingly, the full $41.4 million relating to the finance lease ROU asset was written off and expensed to research and development during the year ended December 31, 2020. As of March 31, 2023, the balance of the finance lease liabilities-current and finance lease liabilities-noncurrent are $1.8 million and $17.2 million, respectively, and are directly related to the Company’s MassBio agreement. As of December 31, 2022, the balance of the finance lease liabilities-current and finance lease liabilities-noncurrent were $3.0 million and $18.7 million, respectively. Additionally, the Company recorded finance lease costs of $0.4 million and $0.4 million related to interest on the lease liability during the three months ended March 31, 2023 and 2022, respectively. The Company also leases certain vehicles, lab equipment, and office equipment under operating leases. The Company’s leases have remaining operating lease terms ranging from 0.9 years to 16.2 years and certain of the leases include renewal options to extend the lease for up to 20 years. Rent expense was $7.1 million and $5.3 million for the three months ended March 31, 2023 and 2022, respectively. The components of operating lease expense were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Three Months Ended |  | Three Months Ended | ​
​ | ​ | ​ | March 31, 2023 | ​ | ​ | March 31, 2022 | ​
Operating Lease Cost | ​ | ​ |  | ​ | ​ |  | ​
Fixed lease cost | ​ | $ | 5,473 | ​ | $ | 4,126 | ​
Variable lease cost | ​ |  | 1,353 | ​ |  | 1,076 | ​
Short-term lease cost | ​ |  | 303 | ​ |  | 74 | ​
Total operating lease cost | ​ | $ | 7,129 | ​ | $ | 5,276 | ​
​ Total operating lease cost is a component of operating expenses on the consolidated statements of operations. Supplemental lease term and discount rate information related to leases was as follows as March 31, 2023 and December 31, 2022: ​
​ | ​ | ​ | ​ | ​ | ​
​ |  | March 31, 2023 |  | December 31, 2022 |
Weighted-average remaining lease terms - operating leases (years) |  | 11.57 | ​ | 11.61 | ​
Weighted-average discount rate - operating leases | ​ | 8.63 | % | 8.61 | %
Weighted-average remaining lease terms - finance lease (years) |  | 9.76 | ​ | 10.01 | ​
Weighted-average discount rate - finance lease |  | 7.80 | % | 7.80 | %
​ Supplemental cash flow information related to leases was as follows as of March 31, 2023 and 2022: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Three Months Ended March 31,
​ |  | 2023 |  | 2022
Cash paid for amounts included in the measurement of lease liabilities: |  | ​ |  | ​ | ​ |
Operating cash flows from operating leases | ​ | $ | 3,811 | ​ | $ | 3,411
Financing cash flows from finance lease | ​ | ​ | 1,379 | ​ | ​ | 1,276
Operating cash flows from finance leases | ​ | ​ | 1,621 | ​ | ​ | 1,724
​ | ​ | ​ | ​ | ​ | ​ | ​
Right-of-use assets obtained in exchange for lease obligations: | ​ |  | ​ | ​ |  |
Operating leases | ​ | $ | — | ​ | $ | 587
​ Future minimum lease payments under non-cancelable leases as of March 31, 2023 were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Operating Leases |  | Finance Lease | ​
2023 (excludes the three months ended March 31, 2023) | ​ | $ | 11,575 | ​ | $ | — | ​
2024 | ​ |  | 18,465 | ​ |  | 3,000 | ​
2025 | ​ |  | 20,434 | ​ |  | 3,000 | ​
2026 | ​ |  | 19,986 | ​ |  | 3,000 | ​
2027 and thereafter | ​ |  | 193,792 | ​ |  | 18,000 | ​
Total lease payments | ​ |  | 264,252 | ​ |  | 27,000 | ​
Less: Imputed Interest expense | ​ |  | 154,212 | ​ |  | 7,959 | ​
Total | ​ | $ | 110,040 | ​ | $ | 19,041 | ​
​

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